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Money upfront for key services: Newman

The states must receive a proper revenue stream if they are to take full responsibility for front-line services such as health, education and law and order, Queensland Premier Campbell Newman says.

At the Liberal Party federal council on Saturday, Prime Minister Tony Abbott outlined a game plan to reform the federation by winding back the federal government's role in core state responsibilities.

He told the Melbourne conference it would ensure state and territory governments were "sovereign in their own sphere", and end waste, duplication and buck-passing between Canberra and the states.

Treasurer Joe Hockey said it was the best way to streamline the system.

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"Those governments that have responsibility for delivering the services to the community should actually have accountability for delivering those services," Mr Hockey told Sky News on Saturday.

With some states running on surpluses, they were in a good position to take ownership of the key services, Mr Hockey said.

Although health, education and law and order were enormous growth areas, he admitted.

"We recognise that. We've got to come to an agreement," he said.

Premier Newman said he would be happy to take on the responsibility for the services, but he would need the federal government to commit to adequate revenue.

"The Commonwealth do need to hand over some of the money, upfront, to the states so we can be accountable," Mr Newman told Sky News.

"If the prime minister is saying the states are responsible for health and education, I say that's fantastic, more than happy to be accountable to the people of Queensland for that ... (but) the states must receive a proper revenue stream."